WASHINGTON, March 7: A stumbling US economy lost 63,000 jobs in February, according to a shockingly weak report on Friday that prompted the Federal Reserve to take fresh steps to pump liquidity into the stressed banking system.

The Labour Department report showed the second straight month of losses in non-farm payrolls, seen as one of the best indicators of economic momentum.

In January, revised data showed a loss of 22,000 positions, compared with an earlier estimate of a drop of 17,000.

February’s loss was the biggest since March 2003, at the start of the war in Iraq, and a major disappointment for analysts expecting a gain of 25,000 jobs. For some, the report confirms the US is in recession.

“The payrolls report had recession written all over it,” said Avery Shenfeld, senior economist at CIBC World Markets.

“It’s nearly unheard of to see these numbers outside of recession.”

The unemployment rate, which is based on a separate survey, fell to 4.8 per cent from 4.9 per cent a month earlier, the Labour Department said. This is attributed to people dropping out of the workforce, after being unable to find jobs, according to officials.

The labour force available for work fell by 450,000 and the participation rate slipped 0.2 percentage points.The report was released minutes after the Fed announced actions to pump more liquidity into the distressed banking system, which is reeling from a horrific slump in housing and tighter credit, in a further threat to economic growth.

Details in the payrolls report showed an economy quickly losing steam.

Private-sector payrolls fell 101,000, in a third month of decline, including a loss of 52,000 jobs in manufacturing and 39,000 in construction.

The main gains were in government, which added 38,000 jobs.

Overall, the report signalled a sharply weaker-than-expected performance for the US economy, which according to analysts needs to add at least 100,000 jobs per month to keep pace with new labour market entrants.

“The weakness in housing is starting to catch up to the rest of the economy,” said Shenfeld.

The US economy expanded at an anaemic 0.6 per cent pace in the fourth quarter of 2007 and many analysts say they expect the first quarter to show declining activity for the first time since the recession of 2001.

Following the latest data, “The question appears no longer to be are we going into a recession but how long and deep it will be,” said Joel Naroff of Naroff Economic Advisors.

In a sign that inflation pressures remained present, the report said average hourly earnings rose 0.3 per cent in February and 3.7 per cent year-over-year.

The Federal Reserve has been cutting interest rates aggressively since September in an effort to reignite growth in an economy battered by the worst housing market slump in decades and related troubles in the finance sector.

Meanwhile, Canada’s employers in February added 43,000 new full-time jobs, Statistics Canada said on Friday, defying forecasts of 5,000-8,000 jobs.

Meanwhile, for the second straight month, the nation’s unemployment rate held steady at its 33-year low of 5.8 per cent, the government agency said.

February job growth was mainly in construction; public administration; and professional, scientific and technical services, and almost all was realised in Ontario province.

The gains, however, were partly offset by declines in manufacturing and natural resources.

Employment growth over the last 12 months stood at 361,000, up 2.2 per cent.—AFP